>> live from pier 3 in san francisco, welcome to "bloomberg west" where we cover innovation, technology, and the future of business. i am emily chang. first, a check of your top headlines. tech giants are dealt a setback as they try to settle a class action lawsuit over practices. a federal judge said the $324 million suit is small. the plaintiffs have sued apple and adobe. is apple a threat to the chinese government? people familiar with the matter say that apple failed to release documents.

iselle is passing near maui. that was the first tropical storm to hit hawaii in 22 years. there are reports of downed power lines. julio is expected to pass north of the islands. we will see a robot that goes into the water. first, the u.s. has launched additional rounds of airstrikes on extremist conditions in northern iraq. two additional strikes were conducted on a position at a convoy of extremist vehicles. we'll have more on the technology including 500 pound laser bombs coming up. the fight to ensure cyber security. breach after breach from targeted attacks that hit 100 million customers to the

revelation that russian hackers stole 1.2 billion user names and passwords. the latest concern is that even airplanes can be hacked. one hacker showed how easy it is to do just that. i spoke to our editor at large, cory johnson, and a ceo who has been at black hat all week and is gearing up for another conference in vegas. david kennedy, who used to work for the nsa, joined us via skype. i asked him is hacking a plane really possible. >> systems are supposed to be independent. unfortunately, if you put the communication on the same network as wi-fi and you can hack into communication systems and cause a blackout on the actual airplanes -- [indiscernible] it is damaging to see that.

or the actual dvr systems. >> are you saying for a skilled hacker, it's pretty easy to do? >> that is the problem. these are things that are default passwords. passwords that are known you can log into. it does not even the -- you do not need to be a skilled hacker to get into the systems. what it shows that sourcing these products from a lot of different companies and are not passing the security and [indiscernible] more connected systems and things like that that introducing more risk. >> david, what is the state of it right now? every year, there are more systems and more freak out woe. what is the state right now?

>> black hat is the largest hacker conference in the world and that is where i am now. researchers come to share their research. what is interesting is there is no lull in finding what we are finding. there are breaches all of the time. [indiscernible] we continue to find more and more exposures. that's a big theme. we are not doing enough to protect privacy and health. there's a lot of concern over conference we're not doing enough to protect people. >> what about safety? we were talking about planes. that's been a big talk at the conference. there was one shocking presentation. are you saying anyone with these skills and will could take down a plane midair? >> we did not go as far but being able to manipulate communication can cause a lot of issues.

coordinates can cause major issues. probably from legal implications but it looks like they can do things to make a plane divert. just by looking at the in-flight wi-fi system, other things you can take control of that are core to the operations, that is what we need to start looking at and holding these companies liable. >> i do not know, cory. things look scary to me. >> it is scary. in terms of mobile, if more places we see, we see an explosion of risk not just the plane but everybody with phones and tablets and increases volatility? >> it does. we are moving to more wearable devices.

the galaxy gear and apple will probably release the iwatch. we are making tell technology integrated into every aspect of our life. you continue to see a lot of these technologies, anything from eavesdropping to [indiscernible] right now, there's not a lot to do when it comes to protecting. >> david, another story, google and yahoo! teaming up to make e-mail more secure and spy free. what do you think? >> predictive privacy which is a known type of encryption. the problem we have is that the nsa is some of the most -- best breakers you have. what is show his companies started to take privacy

-- what this shows is companies started to take privacy seriously. up]l breaking there are competitors working together to make sure the information back and forth is done securely. what is interesting with google, some years ago, they said you should just allow the internet to be open and free. it is nice to see google protect. it's a catch 22. they were a little upset that the nsa was spying on their internal communication. >> david kennedy. we look forward to hearing from you on the top topics. coming up, kim kardashian, adding a new title to her resume. videogame icon. the ceo of the company that brought us this popular video. ♪

>> welcome back to "bloomberg west." i am emily chang. kim kardashian has found major success in the gaming world. she has lent her likeness to the latest game, kim kardashian hollywood, that lets users go on dates to achieve a-list status. shares have been soaring.

cory johnson is with us. the ceo and executive producer of the game, it was your idea to include kim in the game. tell us about how special this game has been. it has been number one in the apple store. you have made millions of dollars on it. give us the numbers. >> it is probably going to be our biggest game of the year. glu puts out dozens of games a year. this our biggest ever and our best reviewed game at the moment she has been as high as number three in the u.s. apple store and it is consistently in the top five especially the first game in a year that has been this high as an entry. >> it is hard to knock out other games.

it was your idea to get her involved. how involved has she been? >> about 18 months ago, i went down to hollywood and did three or four partnerships. "terminator" and "james bond." kim was part of the partnerships. andou met a james bond terminator? >> yeah. kim was part of the partnerships. the idea was to take a gaming engine which will launch before and we knew it monetize and add her branding to it. she really got to the ideal quite quickly and jumped on board. she has been quite involved. we probably exchange one or two e-mails a day and talk on the phone every few weeks about new content updates and new events and clothing. >> does she come to you with ideas? >> she is busy but she has been great to work with.

she is very commercial and responsive. she knows her fan base. she is unique because she is a one-stop shop branding partner for glu. >> you just returned from her home. you refer to the game as a "she." the chasing of the female game player has been a longtime problem for the gaming industry. what did you know about this game engine that is attractive to women who play the game? >> we believe it is a majority female. but not the super majority. you will be surprised at how broad the base is. it is a role-playing game. it is for a broader demographic. it is old and young. fans of hollywood and kim. and fans of those making adult decisions. who are you going to date and work with? >> you say guys playing this

game? >> it has a progressive tone. there are same-sex couples. it was for a broad base. there are millions of people download and play the game. >> what is the key of getting women to play this game? why does it resonate to women? >> it is a mixture of aspiration of her fan base and the fact it is not a dungeon crawler or combat game. there is no shooting. we make those games. but ultimately -- >> that was your most successful game to date. >> it has done to 100 million. kim said this one will get there. it caters to the deeper gamer who was to play all the content. and for those who want to play 5 or 10 minutes a day. >> i admittedly watch "keeping up with the kardashians." >> who doesn't?

>> but one thing i've heard about the game, there's been some criticism, some players said they were tricked into tweeting about it and some tricked into spending money and their kids paid money. how do you respond? i do not want anybody to know i will be playing this game. no offense. [laughter] >> some admit they are loyal followers. apple and google have the best reputation in the consumer technology space of protecting all demographics especially younger ones and minors. they are tight on privacy controls and that is why we do not know was plane for example. when you have a game that is that high up, it's is probably doing 500,000 installs a day or more. the sheer number of people playing and have downloaded means there will always be one parent who probably forgotten they have given their child the password to their phone.

and maybe they buy something. we have not seen issues on this front. the game would not have such reviews if there was more. >> tweeting is not the -- >> 0.0001% have had an issue. >> will you get kanye involved? >> most of hollywood is interested in doing something similar. it is not that easy. when i went to find a partner, kim was top of mind because of her fan base. the game is by making it in hollywood. not everybody else's fan base is exactly the same. it is not clear how we branch out. >> who is an ideal new character for you? >> we have looked at other

genres that do not compete with kim. maybe the music space or sports. someone with a huge social fan following. she's got like 30 million followers. >> kanye is a musician. >> it's a case of knowing where he lives. >> he knows surely. eria did felt it through carefully. >> what about other characters in the kim game? khloe kardashian or beyoncé and jay-z? maybe they can duke it out because they did not show up to the wedding. >> i am not sure if she would approve that. that's not quite the tone. [laughter] >> also lamar odom. >> i do think the game will go a long time. we will update it very aggressively. there will be a new location

every month. we have done paris and mexico and will have london that is featured on the apple store. we will keep it up. trying to keep the game airing reali life. her it is something unique about the overall experience. >> niccolo de masi, ceo of glu. maybe i will play it if nobody knows i am playing it. >> i am downloading it. [laughter] >> is apple a threat to the chinese government? it appears china thinks so. that is next on "bloomberg west." ♪

>> welcome back to "bloomberg west." i am emily chang. look out "game of thrones," there's a new show airing on starz that may give the hbo juggernaut some competition. it is called "outlander." it is adapted from the popular books. the show is set in 18th century scotland and combines fantasy with period drama. we spoke to ron moore about what makes the show different. >> it is a great story. it is based on a series of books that have a fan base that love it. visually, it is a handsome production. we shoot on location in scotland and take advantage of the light and the scenery. it is a gripping story and great characters. beautiful to look at. >> it premieres tomorrow 9:00 p.m. eastern on stars.

-- starz. not just xiaomi that apple is battling in china but the chinese government. the company failed to release certain documents. apple computers including the macbook are said to have been excluded from products that can be bought from public funds. cory johnson with more. the list has been developed to protect china security and national security interest. do they think apple is a threat? >> one of the ways the list is compiled are the products have to be opened up quite literally all the way to the way the product is made and apple is not comfortable doing. the notion that companies, china competes with a lot of the technology inthe country in a lot of ways and the raw materials to make it at understanding how the technology works.

apple, and a lot of back-and-forth between apple and china. apple was unwilling to give up every product spec. >> not surprising. >> and maybe some saw it as a surprise. companies like xiaomi making phones for china and may be scared the secrets could be shared. >> it means apple products cannot be bought with chinese government money? how much will it hurt? how much of the government buys the apple products? >> it is about the same with the u.s. in terms of gdp. we do not know. we know how important china is to apple. apple coming into china, a significant part of apple's overall picture. we see it growing dramatically over the time. and it has been a profit center. apple is a company that makes a lot of money and a lot of the money is made in china.

$5 billion last year. much of the market is not the government about consumers. >> cory johnson, our editor in large, and thank you. the u.s. military has just conducted airstrikes in iraq. some of the advanced technology that the military is using. you can watch us streaming on your tablet, phone, bloomberg.com and apple tv. ♪ >> time for "on the market." let's see where the stocks ended the day. the biggest one-day gain since march. turning around the losses we had for the week and turning into a

gain. theretionary stocks leading gain. more with "bloomberg west" next. ♪

>> you are watching "bloomberg west" where we focus on technology and the future of business. i am emily chang. the u.s. military has some of the most advanced technology and the world and that technology is once again use in iraq. just hours after president obama authorized limited airstrikes, two jets dropped 500 pound bombs guided by lasers on areas held by militant groups. the isis instruments were using the artillery to shelled positions in the capital of irbil where some u.s. personnel are stationed.

it comes after isis seized large amounts of territory including the largest dam. joining me to discuss the technology use in air stars is a riki ellison, founder of missile defense advocacy. thank you for joining us. first of all, is it unusual to get this much detail from the department of defense about what exactly they are doing in iraq and what technology is being used in the airstrikes down to what kind of bombs are being dropped? >> it is part of the deterrence of the groups that are fighting. we have the capability to kick them out, so hopefully, with the draw them before we do decisive actions. >> how exactly do these bombs work?

we here they are laserguided. what does it mean? >> they will have programming. they will have that and be dropped and go and that direction and will have ground forces that will be lasering or painting the exact target they want to hit. that information gets added to the bomb and it goes to the laserguided position. it is very surgical technology. it has been developed over the last 10 years in afghanistan to reduce lateral damage on civilians. >> this is technology that hasn't been used over the last decade in other situations in other conflicts? >> it has been perfected especially in afghanistan. artillery rounds, go for 100 yards within a 10 yards of accuracy. it has been pushed because of the civilian sensitivity of

collateral deaths and trying to exactly pinpoint what you want to target without killing civilians. >> what about the defense systems on the jet themselves? we saw a commercial airplane shut it down over a war zone and ukraine. what keeps the u.s. jet safe? >> i am pretty sure they would have went over the entire area to get a system out of place before they put that type of plane into the operating area. looking for any type of radar or system in place. the planes have capabilities inside of them for countermeasures that can dissuade any type of a radar seeking missiles. they are pretty safe i believe in this situation with the type of fighters they are fighting. >> we heard isis is fairly well supplied and they have oil and money and military equipment and control over a major down -- dam.

what do the insurgents have against the type of air size of the u.s. have? >> i do not think they have much. that is a complicated system. that would have to acquire and be trained on to be able to apply that. there are systems over in syria that you saw over in ukraine. that sophistication that would have an opportunity to shoot down a u.s. aircraft. i do not think they have that source or availability of that kind of weapon. >> in terms of where guided missile technology is going, how is it evolving? what is the next frontier? >> you try to reduce the amount of bombs or artillery they are using to hit targets. to get that technology and be able to be as accurate as possible to only use one strike,

one hit. it is where we are going. there's no one in the world a better than the united states on this technology because of what happened in afghanistan and using that aspect of it. the other bigger technology would be the laser, using the laser as a weapon to take down rockets, mortars, missiles, etc. that will be further down and they are looking at systems that can be used half a cup of diesel fuel to shoot a deadly laser. that is one of the big technologies. >> how many years off my that that technology be? >> well, we have demonstrations and place today. it depends on how much

investment we put into the systems. i see there could be something in the next four years that could be in the battlefield and could take out the rockets and mortars and so forth from a laser position. we have had the lasers being experimented on u.s. ships in the gulf that can take out rubber and so forth. there are lots of things, power issues and whether within that system that has got to be developed and put more research into it. >> are these technologies coming from traditional military firms, defense contractors, or startups, of stars and companies out there that are developing new things? >> this most likely from defense industry aspects. it takes quite a lot capital and resources invested in this type of energy capability that we are doing. >> we know it is the type of

technology use in the airstrikes right now, if it expands, can you imagine what other technologies they may employ to get the job done that they feel needs to be done? >> i think that is the future of the speed of light weapon. it is a weapon that is unlimited. the cause of engagement is very minimal. it is trying to understand how you can put it inside of an atmosphere. once the ray of light that goes, there is no end to it. you have to make sure you are covered when you shoot it and if you mess on that aspect -- miss on that aspect. that is where we will go to be ahead of everybody else in that type of system. to be able to take out missiles and planes and use offensively. >> riki ellison. we will continue to follow what

is happening in iraq and bring you any latest updates throughout the day. tropical storm iselle makes landfall in hawaii. one robot is navigating the stormy waters gathering information included critical data. we will hear all about it, next. ♪

>> i am emily chang. this is "bloomberg west." tropical storm iselle came onto the island of hawaii. it was downgraded from a hurricane before hitting land. thousands are without power and downed trees and power lines have cut off access to part of the island. hurricane julio is quickly coming up behind and could hit

landfall this weekend. one company, liquid robotics, sent its robot straight into the heart of the storm gathering critical data and live tweeting. joining me is cory johnson and president of liquid robotics. thank you for joining us. i am from hawaii. i spoke to my friends at home. they are home and boarded up their windows. what can the robot do in a hurricane? you have 11? >> we have a 11 gliders around the big island and 2 on this side where the brunt of the storm hit. >> what do they do? >> they collect all kind of information and water temperature and current to get better. we are right on the surface of the ocean and collecting all of this data.

hurricane forecast from satellite above the clouds and we are right on the surface and gathering real-time data and applying get back to shore. >> what kind of data do scientists not know when hurricanes go across the water? >> this is the first time that something has been on the surface and gathering real-time information. you can put buoys out but they are not in the deep ocean. all of the hurricanes in the atlantic and there is no measurement. >> like when the temperature change and to monitor wind speed from the air and radars? >> as a can of but it is an estimate. -- they can, but it is an estimate. barometric pressure, we are right on the surface. >> are you giving it to meteorologists? are they using it?

>> sure. they are using the information. it is on our website. we are tweeting. you can collect weather data. >> i remember -- this the first hurricane and they came close to hitting hawaii in more than 20 years. i remember what it can do is so different that what you were able to do then. what is the potential for this technology and what else can it do? i swam with the wave glider in hawaii a couple of years ago. >> we do a lot of work with the defensive department. we can put sensors on the way the water. there is no engine or fuel. it is solar powered. we drive our communication technology, wi-fi and cellular. a java-based system on board which is why we can tweet and

get information. fleets of these wave gliders can collect information. the ocean covers 71% of the earth's surface. >> it is so sustainable. in terms of the employment, what do they cost? >> they are about $300,000 per vehicle depending on how many sensors you put on the platform. just to give an example, if you put a ship and go 50 miles offshore, is $100,000 a day to run the show with fuel and crew and everything else. >> there are other things it you are using this technology for light oil spills. tell us about what else. >> oil and gas, we have a joint venture. a lot a regulation in the business as you can imagine. if an oil cap is leaking, you

want to know that so a wave glider can detect and the surface. also general security. a lot of the island nations, a big problem is illegal fishing. we have the gliders. >> hurricane julio is coming up. how kind of indestructible are these? how much can they withstand? >> this is very interesting. three weeks ago, will want for a super typhoon and the south china sea. there were 180 miles per hour winds. we were transmitted data all the time. we went through 15 hurricanes and typhoons. the biggest was three weeks ago. >> it survived? >> it survived and transmitted the whole time. >> was it water all over? >> we had all of these sensors.

it did not have a camera. >> what about discovery? there are a lot of issues to find place to drill for oil offshore in the current technology is sort of sonar guns. do you guys work like that? >> we do. we help to do seismic testing. sensitive areas. the wave glider, from top to bottom, is about 20 feet in total. we can go in shallow areas. it is quiet and we can listen. the easiest analogy would be the ears of the ocean. we are listening. we listened to ships and they fire off cannons. >> gary gysin, liquid robotics president and ceo. thank you very much.

we have a live shot on turtle bay. this is the island i grew up on. tropical storm iselle has hit it. all of the islands in the path of hurricane julio which could hit it this weekend. still unsure of how hard it will hit land. it may be traveling more north of the island. there is a satellite shot from up above we were discussing. some of the rarest minerals on the land are used to create some of tech's top items from files to electric cars. what are the hottest rocks in tech? that is next on "bloomberg west." ♪

>> welcome back to "bloomberg

west." i am emily chang. rare elements are critical for making everyday technology like smart phones. what are these elements and how do they get into your phone? cory johnson is back with a more. >> american elements sells almost every element on the periodic table. good to see you. this is something we do not talk about much. the physical stuff that goes into all of the technological devices we talk about on the show all of the time. how has he changed over the course of the past 10 years? >> if you went back 10 years ago and asked if you are in high technology they will say i write code. not realize it is not called algorithm valley but silicon valley. and now we are reflected by guys like elon musk that went from paypal to building rocket ships.

innovation is the buzzword. when you talk about inventing things and modern times. >> i read an article, a great piece on a yale study that tells about how rare some of these metals are. specifically the innovation, the computer of 20 years ago may have used 14 elements and now for five times that and that is why they are so much faster. if we had to go back, we will go back to slower machines as well. where do these things come from? these newer elements? >> all over the world. they tended to be concentrated in special areas. your viewers will know -- 14 elements on the periodic table. essentially they all come from china. china just won the russian roulette game. they have monopoly on the

materials. >> an important development just yesterday where china had changed the game a while back and said we will raise the price of exporting these raw materials. if you want to make something, you can make them for a lot less in china. the effect of mining on the economy, is it about that or china trying to capture the manufacturing? >> if you accepted the ruling of the wto, it's trying to control the industry. they were really private plants. it was clear that the process was to basically drive jobs. if you think about -- >> the wto approved deals about economics. >> if you have a super mining industry, you may create 10,000 jobs but if you pass it down to automobiles or electric cars, that is million of jobs. it's a jobs driven decision.

>> the wto approved deals about economics. >> if you have a super mining industry, you may create 10,000 jobs but if you pass it down to automobiles or electric cars, that is million of jobs. it's a jobs driven decision. >> the electric car uses a lot more raw materials and different kinds of minerals. what kind of things are in electric cars than other cars? >> the most powerful magnet known to man so all electric cars have the magnet. the glass polish. to absorb the wavelength. it is ubiquitous. >> and a cell phone. whether lots of fun -- we have a lot of fun about the new iphone about what is inside. if you look inside of a cell phone, what kind of material is

it used? >> sarnoff to get europium. [indiscernible] it's a magnet. serum in the glass. loads of them. >> michael silver, we appreciate your time. >> all right, cory johnson, thank you. and thank you all for watching this edition of "bloomberg west." you can get the latest headlines all the time on your tablet, phone, bloomberg.com, and bloomberg radio. see you later. ♪

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>> we are finding it, we are testing it, we are there as they build it. we are on a quest to show you the most cutting-edge companies on the brink of the future. >> tonight, i will step into a tinkerer's paradise. techshop is democratizing invention. >> techshop changes the nature of the innovation process. >> i will get a taste of the miracle berry with an all-star chef who is taking on obesity. what you are basically describing is eliminating sugar. >> and i will take local motor'' crowd-source rally fighter off-roading in the desert. >> "bloomberg brink." ♪ companies that break the mold, convention, boundaries.